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Prosecutors drop tax fraud charge against San Francisco man. Why?

| May 24, 2012 | Uncategorized |

In an earlier post, our San Francisco Bay area readers learned about the Internal Revenue Service’s increased efforts for compliance regarding earnings in foreign bank accounts. In light of that, why would federal prosecutors drop charges against a San Francisco man?

According to news sources, a man from San Francisco helped his mother hide assets in offshore bank accounts by failing to declare her earnings and helping her smuggle cash into the United States. The man was charged with one count of conspiracy to commit tax fraud related to offshore asset disclosure and three counts related to the false tax returns. The man pled not-guilty.

The dollar figures involved are not insignificant. The mother reportedly hid $11.3 million in a UBS bank account in Switzerland and was involved in smuggling $450,000 from other countries into ours. The mother pled guilty and is awaiting sentencing.

Here is what allegedly happened:

  • In 1993 mom opens an account in Lichtenstein under a false name.
  • In 2005 mom opens an account in Hong Kong under a false name.
  • In 2005 son visits UBS account in Switzerland and withdraws $150,000 in cash.
  • In 2007 the son withdraws and smuggles an additional $300,000.
  • In 2007 these accounts were worth $11 million.

The charges against the son are related to the tax returns he prepared for his mother in the tax years 2005 through 2007. He also allegedly failed to report $1.98 million in income from the offshore accounts.

In 2010 the mother admitted guilt and paid a $5.5 million penalty. She awaits sentencing. Last week the federal prosecutor in Manhattan dropped the charges against the son stating that justice would not be served by pursuing the case. The mystery is — what happened?

Source: Bloomberg News, “U.S. Drops Case of Man Accused of Helping Mom Hide Money,” David Voreacos, May 23, 2012

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